Editor’s note: This market commentary is provided by the Dairy Division at FCStone/Downes-O’Neill in Chicago, Ill.
Sliding CME spot cheese prices kept both front-month cheese and Class III futures under pressure throughout Thursday’s session. However, when looking past March, both cheese and Class III found support, and even managed to finish the day quite strong.
May and June Class III futures settled 13 to 14 higher, while second-quarter cheese futures contracts settled ½ cent to 0.9 cents firmer.
The Class III market support was a bit easier to comprehend, considering Wednesday night’s surprisingly strong NDSPR whey price. Weekly whey numbers once again in the low 60s are certainly making some speculative Class III shorts weary. The 10-cent difference between NDPSR whey and spring futures equates to approximately 60 cents per cwt. of Class III price.
Spot session results:
Block cheese: $1.595 (down 1 cent)
Barrel cheese $1.57 (down 1 cent)
Grade A NFDM: $1.4975 (unchanged)
Butter: $1.55 (unchanged)
Despite a firmer U.S. dollar yesterday, the grain markets unanimously closed higher.
As May corn challenged the $7.00 mark, it shattered through it impressively from a bull standpoint. Export sales were strong for beans and respectable for corn. With weather concerns a mix out there and technical strength allowing some fund buying, there was little to hold the grain markets back.
Corn is predominantly supported by old crop tightness. We can all debate the new crop situation all we want till we are blue in the face, but old crop is factually tight and the old/new crop spreads continue to widen in volatile fashion with old crop gaining considerably on new crop. Just when you think things are most set in one direction (bullish or bearish) is when they tend to kick you in the rear end. Right now, there is a lot of risk out there and a lot of money on the sidelines that can push these markets hard in one direction or the other, and right now they are pushing bullishly. Expect that to continue until some shifting weather report. Keep in mind the Dow and S&P are about to make new all-time highs and there is money to be spent on food in the world and risk here in the U.S.
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